Spotify’s premium service is apparently not paying off

Spotify’s music service has gained a lot of popularity since it emerged in the U.S. market last summer. However, a new report says Spotify has fewer paid subscribers than expected.

According to unnamed sources associated with music labels that have made deals with Spotify, Spotify hasn’t gained much traction and there are fewer paid subscribers than the labels expected, the New York Post reported. They also told the Post that “People aren’t 100 percent happy. Spotify overpromised,” although it’s unclear if the “people” referred to are Spotify users or the music labels.

The Recording Industry Association of America (RIAA) reported at the end of March that music services, including Spotify, Rhapsody, and Rdio, have generated a 13 percent bump in revenue. Not only did the RIAA’s report show that people were purchasing more music, it also revealed that digital royalties paid by music services rose as well — a win-win for music labels.

Originally launched in Sweden and then extended across Europe, Spotify made its way across the pond to the U.S. nine months ago and was a hit. Since then, it’s signed up more 3 million paid subscribers worldwide in 13 countries. Out of that 3 million, 600,000 people in the U.S. are paying to use the service.

Spotify has tried to entice is users to pay for a subscription by limiting how much music you can listen to for free. Recently, the company has loosened the reigns by giving people an apparent music free-for-all. Rumors have flown that Spotify is raising a large round of funding that would value it at $3.5 billion, which would mean the company wouldn’t be hurting for cash.

Spotify’s paid subscribers pale in comparison to those of Rhapsody, a 10-year old company that has one million subscribers in the U.S. The music streaming service giant charges $10 per month for web music streaming and $15 per month to play music on a mobile device, slightly more than Spotify.